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"I believe there is no perfect size for a council and what works here may not work for those that are three streets to our south. I do believe small can be effective," she told the rally.

Woollahra is one of at least six councils still fighting its forced merger in court, with ratepayers footing the cost of the hefty legal bills.

Questions about mergers have intensified since Deputy Premier John Barilaro declared his party would stand against further forced council mergers in regional areas following former premier Mike Baird's resignation.

Ms Berejiklian has promised to "listen to the community" about the issue.

Labor's spokesman for local government Peter Primrose on Tuesday urged the premier to ensure no more councils are forcibly merged - regardless of their location.

Forcibly merged councils such as Gundagai and Tumbarumba (in the Riverina) and Holroyd (in Sydney's west) should be able to voluntarily de-merge if this is supported by the majority of their local community, he said.